Unconsolidates the Hudson River-Black River Regulating District

Summary of specific provisions

Section 1 amends section 15-2109 of the Environmental Conservation law (ECL) to separate the boards of the Hudson River regulating district and the Black River regulating district.

Section 2 amends Section 15-2137 of the ECL law to separate the districts into two separate districts. It also amends the current board structure and creates a separate and distinct Black River regulating district board that shall consist of five members whom shall be from the Black River area.

Section 3 amends Section 15-2139 of the ECL law transfers the functions powers and duties are hereby transferred and assigned from the joint Hudson River Black River to the appropriate individual regulating districts.

Section 4 amends Section 15-2141 of the ECL law to require that the general funds and debt service funds of the individual regulation districts shall be kept separate and apart.

Section 5 sets out the effective date of the legislation.

Justification

In 1959 the Hudson River Regulating District (HRRD)(established 1922) was combined with the Black River Regulating District (BRRD)(established 1919) creating the Hudson River-Black River Regulating District (the Regulating District). The combined Regulating District is a New York State public benefits corporation established by the NYS legislature in Article 15, title 21 of the Environmental Conservation law (ECL). By law, reflecting the wisdom of the legislature at the time, the accounts of the two districts are required to be separate.

The Black River and Hudson Rivers are separate and distinct as are the positive and negative impacts that flow from their passage through New York State. Similarly, the benefits and costs associated with the regulation of these impacts by the regulating districts are separate and distinct. Unique problems with respect to the method employed to assess fees necessary to fund its operations have resulted in the Hudson River Regulating District facing a dramatic and crippling shortfall in revenues. After a federal court ruling eliminated its ability to charge utility companies certain fees that made up a large percentage of its budget the Board of the Regulating District

initiated a process set out in the ECL to charge the counties through which the Hudson River flows flood-protection fees in order to fill the HRRD budget shortfall. The affected counties have challenged this decision and the HRRD faces years of protracted legal proceedings before a new fee structure will be in place.

The revenue shortfall the Hudson River Regulating District is facing is close to $4.0 million of its annual $5.4 million budget. The Black River Regulating District is currently fiscally sound. In order for the HRRD to make up for this shortfall, in the face of its inability to assess the benefitted Hudson River counties, it proposed that the HRRD borrow from the BRRD. The Office of the State Comptroller (OSC) denied this request. In a letter dated October 23, 2009 to the Hudson River-Black River Regulating District, the OSC stated that ECL. §15-2141(1) requires that: moneys constituting the respective "general fund" or "debt service fund" or other fund or funds of either the Black River Regulating Board or District, shall remain and be kept separate and apart and shall be applied for the cost of maintenance and operation in the area of the appropriate district and to pay the debts and obligations of the appropriate board or district, on whose account such moneys were received.

Since the Comptroller denied this request, legislation (S.6918-B/ A.10785-A) has been introduced this session to authorize what current law will not allow; the borrowing of monies between the two regulating districts. But for the 1959 merger this scheme would never have been considered. The reasoning of this legislation is akin to a financially challenged water district in one county being allowed to drain money from the coffers of a neighboring county's financially sound water district. It is a widely accepted principal that the costs of operating a benefit district should be borne by those who receive benefits from that district, not those who do not live in, or are not benefitted or served by the district. Here the HRRD provides flood control and other direct benefits to the counties through which the Hudson River flows.

While it is unfortunate and certainly untimely, in light of New York State's current fiscal crisis, for the HRRD to be facing such a monumental shortfall, is not appropriate for the legislature to force the BRRD to make the HRRD whole. This is particularly true when the shortfalls are likely to continue well into the future as the legal challenges to the HRRD proposed fee structure work their way through the courts. Black River communities and counties deserve to be assured that a forced borrowing will not result in a financial crisis for the Black River Regulating District similar to that facing the Hudson River Regulating District.

This legislation would once again separate the two regulating districts. It is clear that the Hudson River Regulating District needs a long-term resolution to resolve its financial difficulties. A forced borrowing from the financially sound Black River Regulating District is not the answer.

But for the 1959 merger of the two districts borrowing from the Black River Regulating District would not even be an option.

Prior legislative history

New Bill.

Fiscal implications

None to the state.

Effective date

This act shall take effect on the thirtieth day after becoming a law.